Someone posted here a few weeks back that they were considering doing away with the SD and just charging a non refundable move in fee. Presumably, one would have to monitor the apartment closely with inspections and have strong provisions in the lease about inspections and getting reimbursed for repairs.

There was also some discussion about a meeting Jeffrey hosted where he suggested cutting the SD in half presumably in response to the economic situation in certain areas. If I had a SFH, I might be hesitant to do this, but with a multi, there's generally less to damage and its easier to stay on top of it with inspections.

Let's say I have an apartment that rents for $ 735 that I'd normally collect a month's SD and the first month's rent. I normally charge a standard $ 200 cleaning fee against the SD when they move out, so they'd get $ 535 back assuming no damages. Instead of that, I'd charge a non refundable move in fee of $ 375.00 and have a strict inspection regime to monitor damages.

Thoughts?

For Single family homes, I charge a one time non-refundable $50 move in fee and a full security deposit. I figure my one hour is worth $50.

On my apartments, the market place is bit tight so I have not pulled the trigger on it yet. I suppose I could probably get away with a smaller one without too much push back.

What is spurring this change? Are you having difficulty finding people that can afford the SD and 1st months rent?

In my mind a better option is a payday plan. full SD and 1 or 2 weeks rent.

So instead of doing $375(fee)+$735(1st rent)=$1,110 move-in

Do $735(deposit)+$375(2 weeks rent)=$1,110 move-in and $375 more due later this month.

The move-in burden is the same. Your income goes UP.

The other downside to your plan is more frequent inspections or more "labor/stress" and less of deposit in your hands to collect for damages.

I do the move in fee. Have for about a year now. So far, so good. I have a couple of places still on deposits, due to longer living there residents.

I'm in my places about every three months. I simply let them know that I need to check the detectors, change filters, check under sinks for leaks. No issue so far. I tell tenants up front that I expect them to clean when they move out, and that if they leave a mess to expect to get a bill. Similarly, I tell them if I see damage, I will send a bill.

Most of mine are college students, though. I let them know that if I bill them, and they don't pay, I will send it to collections, and that can impact their ability to get or keep a job. At least a third of my former tenants need security clearance of some type in their jobs, and unpaid bills can mean no clearance. Plus, they will nearly all want to buy a house, at some point.

I do tell them that since I always seem to have about a $75 per unit cleaning bill after the resident moves out, I include that in the move-in fee. They never wash the wall next to the stove, never wipe out the cabinets, always leave some scum on the shower walls, etc. Never vacuum the window track, miss the dust on the trim above the window. So, the cleaning lady does those.

So far, $300 has generally been enough. My least expensive place is $390/month.

I'm considering raising the move-in fee by $50 for the next go round.

Oh, and I make sure they know that the move-in fee makes sure they have a lock on their home and no one else has a key. They usually watch me change the locks in front of them.

Barb,

With college students, presumably the deposit isn't a financial issue (since generally parents pay).

Do you find that you make more money overall with the fee? It seems to me that the incentive to clean upon move out is reduced with a fee, so it would be overall more work for you with not much money gained to compensate?

several thoughts:

1. should it come to that point ever, the magistrate may say it's a security deposit, no matter how you phrase it.

2. A few times on lower end units, I've completely waived the security deposit ...but raised the rent with no reduction once the equivalent of the deposit is paid ... for folks who have the income to pay monthly but just can't get the deposit together.

Most of my tenants keep a reasonably clean house, anyway. I did step up my inspections when I instituted the fee.

I'll know more in a few months, when turnover season hits.

The documentation all says FEE. Not deposit.

I tell them verbally that my cleaning lady will still be in behind them, because there are always some things they miss that I look for. I let them know that if she spends more than a short time there, I'll be sending them a bill.

The key to billing college students is to make it easy.

First, email the bill with lots of photos. Second, give them an easy way to pay electronically. Zelle or Paypal or SquareUP. Many of them will pay if you make it convenient.

Third, be willing to take the hit on with a credit card transfer if they want to use that. So, I'll likely add 10% to any bills I send out.

When I do my quarterly leak checks, I look for things like dust on the ceiling fans - and encourage them to notice it. If I see too much, I mention that the housekeeping needs some work, and do they want my cleaning lady's number? I had one take me up on that. She is willing to do one-off cleanings.

I tried reducing security deposit by 50% ($250 deposit instead of $500) in exchange for a $25/month rent bump that stayed the same for the duration of the lease and any extensions. It didn't work. Tenant got evicted within 2 months. That's not to say it CAN'T work, but I didn't implement it properly. Tenant was sketchy on credit; income was good but time on job was short (6 months). Also, her "current" rent history at the time of application was subsidized. She was only paying $41 per month (out of $600) herself. 2 red flags.

The lesson I learned is only do it for well-qualified tenants (good credit, good references, good income) who have a vested interest in not doing any damages and who have demonstrated a solid payment history, but who just lack a lot of cash up front. Their incentive to clean and avoid damages will be getting a good reference from me when leaving.

Probably going to try it again soon.

Your system is so much fairer.

I read the Chicago area LLs are doing this as the deposit return criteria is crazy and if you screw it up, can get sued for 3x rent.

I collect the move in fee when they turn in their application, as a separate check. They sign a holding fee agreement at the same time. The holding fee agreement states that if they decide not to sign the lease, the fee is non-refundable.